Good policy fuels energy efficiency, absent policy fails us all: IEA

Like it or not, energy resources are distributed around the world higgledy-piggledy. One country may thrive off oil exports, another might be stunningly illuminated by a network of nuclear plants and another will be electrified by vast offshore wind projects. But one resource every country has in abundance is energy efficiency, says International Energy Agency head of energy efficiency Dr Brian Motherway, “and every country in the world is insufficiently tapping into that resource.”

There is always a leader, however, and China is the “biggest story in the world”, Motherway told attendees on day one of the National Energy Efficiency Conference 2016 in Sydney in November. In the Middle Kingdom the turnaround from a very low base 10 to 15 years ago has been “massive”.

By the IEA’s reckoning, China’s industrial sector consumed 350 million tonnes of coal less last year than it otherwise would have. The total savings in China are more than the total amount of energy Germany uses in a year, he says, and energy efficiency makes as big a contribution to the Chinese economy as the entire renewables sector.

The result underlines the importance of policy in achieving results, Motherway says. Since China started to take efficiency seriously in 2005 nothing has stood in its way. That’s one advantage of ruling without the encumbrance of an opposition.

A very good year

Around the rest of the world the trend is also positive.

Over the past 10 years, Motherway says, the world’s ability to squeeze more productivity out of its energy has been improving about 0.6% a year on average. In 2015, that result picked up to 1.8%, a threefold increase.

“We’re going in the right direction. We’re getting more value out of the energy we use.”

The scale of the aggregate contribution of energy efficiency is affecting global markets, he says, but the “key ingredient” is policy. In countries where policy has been set down and is being acted on, energy efficiency makes progress; if there appears to be no improvement in energy efficiency in some parts of the world, it’s because there is no firm policy.

“It doesn’t happen by itself; it needs to be driven by policy. Once that policy is in place, good things start to happen.”

Old-fashioned basic measures which set energy efficiency parameters have made “the biggest contribution in the world”, he says, citing transport standards in the US, building standards in Europe, appliance standards in Japan and industry standards in China as the biggest contributors.

The IEA estimates the cost of efficiencies linked to standards was $US221 billion last year. Does that sound like good value? Yes, when you consider over the same period the 29 member IEA countries collectively saved about $US500 billion on energy from efficiency gains.

“That’s why policy matters,” he says.

Smarter with data

The two other factors pushing efficiencies forward around the world are technology and, somewhat ironically, lower prices.

Big data, remote monitoring, use of intelligent algorithms for optimising systems, smartphone apps, “all of these things are dramatically changing the way we have become empowered to deal with our energy efficiency issues.” As prices for LEDs drop dramatically they become a huge driver of results, even in the absence of policy, he says.

Lower energy prices may have introduced the threat of people becoming less interested in energy efficiency and governments less motivated, but government standards can act like shock-absorbers. In the US, he says, a 40% drop in petrol prices saw an increase in average mileage between 2% and 3% and record sales of bigger vehicles. But relatively stringent US emissions standards mean new vehicles are about 10% more efficient than those bought a decade previously and as a result the entire US fleet is 1% more efficient year on year.

“It’s a slower improvement rate than it has been but it’s still an improvement rate,” he says. “Policy can protect against these other forces.”

Conversations about energy efficiency change, as do the motivations of consumers. Any way you look at it, however, it’s pretty hard to put a case against slowly whittling away at power bills. Besides the economic benefits it helps competitiveness, creates jobs, improves energy security and improves the quality of life.

“It covers so many dimensions of wider social-economic policy,” Motherway says. “I don’t really mind what the focus is, as long as there is a focus and people are interested.”